Decrease in coal and carbon value last week

Coal and carbon lost value in the market but there was plenty of gas in storage last week.

The market report from npower suggests the gas system coped well with very strong Norwegian flows despite cooler temperature. However, the values of carbon and API 2 coal, which is the industry standard reference price used to trade coal imported into northwest Europe is believed to have decreased.

Magali Hodgson, Optimisation Desk Manager at npower said: “Coal API 2 for the calendar year of 2014 still lost a lot of its value on the back of the market still being oversupplied even though there is some rumours of cutting output. Carbon in contract for the same year also lost a lot of its value because nothing’s really been announced from Europe in terms of removing certificate from the market so the 2014 carbon contract lost €0.6 (£0.5) in the week.”

Magali suggests keeping a close eye on temperature forecasts as it could remain a “strong near term driver” in the coming weeks. The US and China’s GDP figures could drive the market as it will give an indication of the health of the global economy for contracts further out.

She predicts power and gas supply outlooks to be “healthy” and says it would take a very extended period of cold temperature to cause concern in the market.